What You Should Think About Philanthropy

December 26, 2007

“He who moves not forward, goes backward.”

–Johann Wolfgang von Goethe

It is practically an article of faith among political conservatives that reducing the economic footprint of government creates space for private entities to more effectively solve the problems of our times. Faith is an appropriate term for it, as anything from the most casual glance to the deepest analysis of evidence fails to support that belief. In open societies where government is comparatively paternalistic, philanthropic efforts have not simply faded away. As societies embrace more cutthroat economic practices, private entities do not surge forth to heroically improve the overall quality of life.

The idea that reducing or abandoning social spending liberates the private sector to actualize superior solutions is another of those popular political convictions that is nice, neat, simple, and wrong. Being nice, neat, and simple, it is an idea that does not require much thinking to grasp. Yet in world that is not consistently nice, often untidy, and rarely simple, much thinking is required to formulate insights containing useful solutions to actual social problems. “Tax cuts create growth” seems to many like a shortcut to wisdom, but it is more typically a bold movement into the realm of folly.

No doubt a society does well to allow private citizens, acting alone or in groups, to use private resources in philanthropic ways. At least in the United States, taxation has nothing whatsoever to do with levels of philanthropic activity. After all, even morally ambiguous activities like supporting a political movement or a religious institution are tax deductible. Clearcut instances of charity, like supporting pediatric cancer hospitals or donating toys to orphans, also enjoy this status. This means no tax burden at all is imposed on resources dedicated to philanthropic endeavors. For some reason that fact rarely gets in the way of opinions many libertarian thinkers espouse about charity.

In reality, rates of taxation have little real impact on the willingness of affluent citizens to finance charitable projects. It can be argued that very low rates may heighten personal luxury to such extremes as to promote more giving. Then again, it can also be argued that very high rates may spur more giving as a means for the “oppressed” upper class to assert more control over their personal incomes. At best this situation is a wash, and the impact is trivial when moving through a reasonable range that is neither very low nor very high.

However, actual social spending certainly can have an effect on philanthropy. In instances where a society abstains from pursuing a political response to a severe and miserable manifestation of deprivation, charitable funds will naturally be drawn into those voids. For example, hospitals that provide free care to children suffering from cancer or severe burns or some other condition that cannot be treated inexpensively tend to be well-funded charities. Few Americans are cold-hearted enough to take the position that gravely sick or injured children ought be forced to come up with the money for their own medical bills. The end result is thriving charitable organizations dedicated to serving those needs.

What would happen if this broad consensus of support for serving those needs was addressed as a matter of public policy? Would the nation be brought to ruin for all the waste and fraud involved in empowering government to provide this sort of medical care? While that notion is ridiculous, what is less ridiculous is the notion that those same charitable impulses presently funding St. Jude’s hospitals and the Shriners organizations might instead be directed elsewhere. An official response to problems virtually no American seeks to perpetuate is not only a fine example of democracy in action — it is also an authentic means of liberating private philanthropists.

It is not as if sponsors and activists working to alleviate the most severe forms of preventable human misery do not also have loftier ideals. Yet for decades, it seems as if the American way of life has been perversely redefined so as to place these burdens on the shoulders of the private sector. To hear pundits from the right spell out their economic agenda, it is as if all citizens have a patriotic duty to demand government inaction when it comes to childhood trauma patients or adults with debilitating mental illnesses.

Clearly no such duty exists. The best arguments for it stink of Red Scare poisons. Even the sitting President refers to such policies as socialist, with the implication that being able to hang that label on them is explanation enough as to why they ought be obstructed at every turn. Unfortunately, beholden to their corporate paymasters, the very Democrats who maneuvered the President into a veto on public funding of health care for severely sick or injured children were unable to step up and defend this eminently good component of socialism.

Obviously there is a role in any healthy national economy for individual action. Most critiques of socialism and/or communism are muddled to the point where the problems of political authoritarianism (no meaningful elections, brutal secret police, widespread official censorship, ubiquitous domestic surveillance, etc.) are blamed on economic collectivism. Yet it is also possible to construct sound critiques, particularly when it comes to extremes of large scale communal economics. Be it because private entities are potentially more nimble and responsive or because economic freedom is a quality of life issue, it would be unwise to nationalize the entire American economy.

Yet it is no less foolish to embrace the idea that the entire American economy ought to be privatized. As nimble and responsive as they might be, private entities also tend to produce piecemeal responses to social problems. They are also at least as prone to corruption as public sector institutions. Be it primary education or interstate highways or coordinating aviation logistics, some activities really are best overseen by government because universal standards and mandatory funding get better results than moody individualism possibly could.

For most issues one may rightly debate whether involuntary taxation or voluntary donations are the right way to finance endeavors to serve the public good. Yet in each instance where involuntary taxation fails to become public policy, demand increases for voluntary donations. If an activity is highly controversial or if its ability to serve the public good is dubious, then a society may do well to avoid government action. When there is widespread consensus that a particular need should be served and a particular course of action will get the job done, then there is good reason to take the burden out of the hands of philanthropists and fold it into the public sector.

Some would say that this oppresses the rich, but does it really? Do wealthy Americans want to live in a society where children may be raised without access to a basic education? Do wealthy Americans prefer living among the contagion that comes from limited access to basic medical care? Would wealthy Americans be better off living in a society where goods and employees were all forced to rely entirely on toll roads? It does take some thinking to see the wisdom of collective action, but that level of thinking should not be beyond the reach of a typical civic-minded American.

The more that the public sector does to decisively satisfy needs that pretty much everybody agrees should be satisfied, the more individuals and private foundations will be able to direct their means toward other needs. This produces more pilot programs to test the effectiveness of new ideas, more pet projects to accomplish forms of good not universally recognized, more private action to influence and elevate civic discourse, etc.

It is true that America would thrive all the more if the private sector were less constrained in its ability to address social problems. What is untrue is the notion that government action is a barrier to that activity. In reality, it is irrational hostility toward government action that generates troublesome obstacles for social progress. If we seek to go forward as a nation, then we must advocate a healthy partnership between private and public institutions. Depicting progress as a struggle in which the private conquers the public ultimately makes both less effective.  This diminishes our capacity to solve today’s problems and blocks useful efforts to anticipate the problems of tomorrow.